Tax Time Again!

How did last year’s major change that time again!s in the tax law affect your bottom line? Were you pleased or disappointed? There are no major changes for the 2019 tax year, so hopefully this time around, you’ve been able to plan and won’t be in for the same kind of surprise when it’s time for you to file your 2019 returns!

There are a couple of things you should be aware of.  Standard Deduction is now $12,200 for a single person and $24,400 for a couple filing jointly, with an extra $1,300 for each person over 65.  Should you be among the few people who do still itemize deductions, the non-deductible portion of medical expenses has gone back to 7.5% of AGI.

Last year we told you about the new Qualified Business Deduction for Business Owners, which is 20% of Schedule C Net Income.  If you do have a Schedule C, it is worth knowing that all medical insurances (including Medicare payments and a portion of your long term care insurance) for you and your spouse can be used as an adjustment to income which then reduces  your taxable income (though not income subject to self-employment tax.)

If you’re among those who lament the fact that charitable contributions are no longer deductible since you can’t itemize and you are required to take Required Minimum Distributions (RMD) from your IRA, be sure to research Qualified Charitable Distributions. (Note: The new SECURE Act passed by Congress in December increases the age at which RMDs must start from 70½ to 72.)  Your broker will have details as to how these work, but briefly, you are allowed to make contributions to charities directly from your IRA, which count towards your RMD but are not taxable. Definitely worth investigating!

Turning to South Carolina, be sure to check out all the credits that are available, particularly the Excess Insurance Premium Credit if you’ve been hit by a large wind and hail insurance bill (remembering to include the cost of your homeowners, flood and earthquake insurance.)

Other credits to be aware of include the Nursing Home Credit, Classroom Teacher Expenses Credit, the Plug-In Hybrid Vehicle Credit, and the Two Wage Earner Credit. And The Motor Fuel Income Tax Credit is still in place- though if you saved all your receipts in 2018 and got a $5 credit, you may have decided that wasn’t worth the effort for 2019!

Did you know that contributions to the SC College Investment Program (529 Plan) are deductible from SC income? Money deposited into these plans can be used for education costs for anyone, including you and there is no requirement that they are used at an SC educational institution.

Have you lived in SC for more than one year and are over 65? If so, be sure to check out the Homestead Exemption on the property tax of your primary residence. (It doesn’t come automatically – you do have to apply for it.)

If you’re new to South Carolina or still use an out-of-state tax preparer, do be sure he or she is aware of these credits. Most tax preparation software doesn’t calculate them automatically.

Tidelines Editors

(Image credit:  Pixabay.com)

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